5 Reasons to go Electric on Car Allowances

5 Reasons to go Electric on Car Allowances

There are 5 reasons to go electric on car allowances with your novated lease program.

Employers have leveraged novated leasing as an effective tool to support employees ‘out on the road’ for decades. An effectively managed novated leasing program enables employees to lease the vehicle of their choice tax effectively through their salary package, and at the same time caps company costs and minimises administration associated with running company vehicles for the employer.

Over the last 18 months there have been two developments that have further driven the efficacy of novated leasing to new heights;

1) The Federal Government’s FBT exemption on zero/low emission vehicles (effective July 2022) and

2) the increasing availability and reduced cost of electric vehicles in Australia.

The combination of these two factors has brought in a new golden age of salary packaging which, in addition to the already well understood benefits of novated, can be broadly summarised in 5 new key benefits.


Electric Benefits for Employees



1.     100% GST & FBT free

Eligible zero or low emission vehicles on a novated lease attract $0 FBT. This means that regardless of the level of business versus personal use of the car, there is no FBT liability. The result of this is that 100% of the finance and running costs of the car can be salary packaged pre-tax (i.e. no post-tax employee contributions required). And because everything is paid for pre-tax, 100% of the GST on the running costs is claimable.

2.     Lower running costs

Electric vehicles are much cheaper to run than their combustion engine counterparts. Not only is the cost of charging significantly lower than the cost of fuel, but the cost of servicing is substantially reduced also. Fewer mechanical parts equal less mechanical overheads.

3.     More expensive car for less money

The combination of the above factors has one big effect for employees… they can lease a significantly more expensive electric vehicle for the same amount of money as a significantly less expensive petrol/diesel vehicle.


Go Electric on Car Allowances through Novated Leasing


Electric Benefits for Employers


4.     Less compliance overheads

Because eligible electric vehicles are 100% FBT free, all of the statutory requirements and compliance overheads associated with obtaining and verifying logbook declarations, reconciling employee contributions and the like are eliminated.

5.     Reduced carbon footprint

For businesses with significant numbers of employees clocking up the kms of the company’s behalf, proactively supporting employees to switch to electric will deliver a significant reduction in carbon footprint. In the example above, the Tesla Model 3 would save 3.28 tonnes of CO2 emissions per year. Across a fleet of 20 vehicles this would save almost 66 tonnes per year and 328 tonnes over 5 years.

These 5 reasons to go electric on car allowances through your novated lease program show that there is a real opportunity to deliver a win-win-win outcome for employees, the business and the planet.

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